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ESG Leverage towards Stock Performance in Indonesia Stock Exchange

Author

Listed:
  • Agus Sugiarto

    (OJK Institute, Indonesia.)

  • Ni Nyoman Puspani

    (OJK Institute, Indonesia.)

  • Fara Fathia

    (OJK Institute, Indonesia.)

Abstract

Increased numbers of policy tools related to sustainable finance has encourage investors to consider the factor of environmental, social, and governance (ESG) in their investment decisions, which has also became one of the main drivers of the recent surge of assets under management (AUM) of global and Indonesian ESGs. This study analyzes the influence of ESG factors on the performance of stocks by using fixed effect model as well as analyzing the perception of investor to ESG as an indicator to determine investment by using the survey method. The results of the study show that the ESG value has a positive influence on the stock performance which was proxied by the value of the market capitalization. Of the three ESG factors, only social factors that have a positive and significant influence on stock performance. Based on the survey results, individual and institusional investors in Indonesia already have a good understanding of ESG; have high interest in ESG; and has allocated their investment towards ESG stocks. In addition, the factor that investors are considered the most in their investment decisions are carbon emissions and waste management in environmental factors; social impact on social factors; and reputation on the governance factors.

Suggested Citation

  • Agus Sugiarto & Ni Nyoman Puspani & Fara Fathia, 2023. "ESG Leverage towards Stock Performance in Indonesia Stock Exchange," International Journal of Energy Economics and Policy, Econjournals, vol. 13(5), pages 593-606, September.
    • Handle: RePEc:eco:journ2:2023-05-63
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Environmental; Social; and Governance; Stock Performance; Fixed Effect Model; Survey; Investor Perception;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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